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Business News/ Markets / Cryptocurrency/  Bitcoin falls 5.2% to $22,253, Ethereum down 5.35% as Silvergate unravels

Bitcoin, the largest cryptocurrency by market value, dropped 5.2 per cent to $22,253 at 2204 GMT on Friday, losing $1,213 from its previous close. The world's biggest and best-known cryptocurrency is down 11.9 per cent from the year's high of $25,270 on 16 February.

Ethereum, the coin linked to the ethereum blockchain network, tumbled 5.3 per cent to $1,560.9, losing $87.1 from its previous close.

Cryptocurrencies took a tumble after the recent unsettling reports involving Silvergate Capital, the bank backing much of cryptocurrency's largest players, losing major clients and teetering on the brink of bankruptcy.

On Friday, Silvergate Capital Corp said it made a "risk-based decision" to discontinue the Silvergate Exchange Network, its crypto payments network, two days after the digital asset-focused bank raised doubts about its viability.

"Effective immediately Silvergate Bank has made a risk-based decision to discontinue the Silvergate Exchange Network (SEN). All other deposit-related services remain operational," according to a Silvergate statement posted on the website.

The Silvergate Exchange Network, one of the bank's most popular offerings, enabled round-the-clock transfers between investors and crypto exchanges, unlike traditional bank wires, which can often take days to settle.

Shares of Silvergate on Friday dipped over 2 per cent in after-hours trading, after closing up 0.9 per cent at $5.77 in regular trade. The shares on Thursday had fallen to a record low, ending the day down more than 97 per cent from their all-time high in November 2021.

Earlier on Wednesday, Silvergate warned in a filing that it was evaluating its ability to operate as a going concern, disclosing that it had sold additional debt securities this year at a loss and that further losses mean the bank could be “less than well capitalized."

Post the warning, crypto heavyweights including Coinbase Global Inc and Galaxy Digital dropped Silvergate as their banking partner. Stablecoin issuers Paxos and Circle, Cboe’s digital asset exchange, and crypto exchanges Bitstamp and Gemini also suspended their partnerships with Silvergate.

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Updated: 04 Mar 2023, 09:16 AM IST
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